Due Diligence – procedure for drawing up an impartial view of the object of investment, which includes an assessment of investing risks, independent evaluation of the investment object, full-fledged research of the company's work, an all-encompassing check of its monetary condition and market position. It is usually carried out before the start of the purchase of the business, implementation of the merger transaction (Accession), conclusion of a contract or interaction with this company. Most often term used in money and law.
The verification process guarantees, that the party is familiar with all the details of the transaction before, how to consent to it. For instance, broker will provide the financier with indicators of a comprehensive audit, so that the financier was fully informed and could not blame the broker for the losses.
Depending on the purpose, due diligence takes various forms. Company, which is considering mergers and acquisitions, will conduct a monetary study of a motivated company. An all-encompassing test may also include a study of future growth..
Due diligence can be attributed to the category of "firm verification", concerning figures in monetary statements, and "soft", concerning the people of the company and its customer base.